Originally Posted by
erlich
What is the possible mechanism for such collusion? There is none.
Even if you are talking about a conspiracy to buy up the entire plane and drive the price up, you'd have to collude before you know it will pay off on that particular flight. And you'd split those one or two awards with what, the entire plane's passengers? And the airline always has the option of canceling the flight. There are so many options that there should never ever be any cap, as is the case with virtually every market that you interact with numerous times daily without batting an eye.
There's some interesting game theory associated with this scenario (trying to corner the market for VDBs) as well. What if you actually get ~170 people together in a group and they conspire to buy out an entire 737-900 and force the VDB price up? First of all, if one of the people has a car crash on the way to the airport and is carrying two others and all 3 of them no show, no one gets anything. So I would hope that all of them had fully refundable tickets. Second, what if one of the 170 is a defector? They all agree that they will bid $50000 to get off the plane, but this person bids $49999, and instead of sharing the profits with everyone, he pockets it. So what do the other 169 people do? Sue him? If they do that, they'd have to admit that they colluded first...